Mutual Fund Portfolio

The first step towards building a portfolio is to have a clear goal. Once you have that, then it's relatively easy to build the rest of the portfolio in a way that's suitable for meeting your goals.

In PrudentFP's way of thinking, goals that need to be fulfilled in the short-term are fundamentally different from long-term goals. Short-term goals are best fulfilled using fixed-income investments. These could be a bank or a fixed deposit or it could be a liquid or other diversified debt funds.

If you are saving gradually towards such a goal, then the bank recurring deposit may be a reasonable tool. It yields a return of 5.8 per cent per annum. However, this should only be used for savings targets that are no more than two to three years away. Any longer and the ill-effects of the low returns will start becoming more and more meaningful.

For fulfilling long-term financial goals, the best option is to use a portfolio comprising of equity mutual funds. As we have read, equity is the only type of asset that can ensure that your money grows faster than inflation and does not actually lose value in real terms. Fixed-income investing is safer, but generally cannot beat inflation.

Equity Mutual funds are the most suitable those who have distant financial goals, say 7-15 years since equity mutual funds can be volatile in the next 0-5 years and thus only suitable for long-term investments. Over the short-term, the ups and downs of the stock markets could very well lead to temporary losses. Because of this, we do not recommend investing in equity mutual funds if your financial goal is nearer that about three to five years. Equity demands self-discipline, regular investing and enough time to create wealth for achieving one's Financial Goals. Before investing in mutual fund, we remind that you should have set the financial goals and, then select the mutual fund scheme according to your time horizon so as to help to determine your risk tolerance and ideal asset allocation - the mix of liquid, debt and equity you want in your portfolio.

To help you determine your target asset allocation, We offer a host of online services to manage your mutual funds portfolio and other investments.You can get integrated consolidate online portfolio view of all your holdings in all Funds serviced by us in one single window through our Wealth Magic Portfolio Online.

Once you have that, you can use mutual funds to construct a diversified portfolio of investments to help meet your needs. Although diversification does not protect against losses in a declining market, it allows you to spread the risk within and across asset classes.

We will guide you systematically in understanding the concepts required for preparing a sound Mutual fund investment plan through:

• What is my risk profile?
• Are all my mutual fund schemes mapped to my financial goals?
• What should be my Asset Allocation?
• What should be the time duration of my investments?
• Why do I need to diversify my portfolio?
• What is my investment objective – income or growth?
• Does my current exposure to equity match my risk appetite?
• Is my current portfolio being driven on creating wealth or chasing high returns?

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Disclaimer

We do not promise that the investments you make based on this plan will be profitable. Investments are always subject to various market, currency, and economic, political and business risks. We will not be liable for any losses that may be caused directly or indirectly by such investment decisions. Let's Start Here